2018 Registration document and annual fi nancial report - BNP PARIBAS346

5 RISKS AND CAPITAL ADEQUACY PILLAR 3

5

Credit risk

Industry risks are monitored in terms of gross exposure and RWAs, in particular:

■ Leveraged fi nance sector:

At 31 December 2018, the Group s exposure to Leverage Buy-Out transactions ( LBO ) was low at EUR 10.7 billion, or 0.7% of the Group s gross balance sheet and off-balance sheet commitments. These exposures are individually very small with an average amount of EUR 8.4 million per loan, and mainly concern European counterparties.

Moreover, in accordance with the ECB Guidelines, the Group has put in place a system for monitoring companies whose leverage ratio exceeds the threshold set by the regulator;

■ Shipping sector:

The Shipping sector covers a set of sub-segments with very different dynamics: bulk, oil tankers, container carriers, oil services, and cruise.

In 2018, despite the recovery of oil prices, the oil services sub-segment (offshore and oil tankers) continued to be affected . Similarly, bulk transport suffered from trade tensions at the international level and lower growth in China. Cruise was the only sub-segment to experience continued growth.

Shipping gross exposure stood at EUR 17.5 billion as at 31 December 2018, i.e. 1.1% of the Group s on- and off-balance sheet exposures. This exposure is carried in particular by CIB (89%) and Domestic Markets (9%) with a high client diversification by country. Doubtful loans represent 6% of Group exposure to the Shipping sector.

The Group remains diversifi ed. No sector makes up more than 10% of total corporate lending or more than 4% of total lending in 2018.

RISK-WEIGHTED ASSETS

➤ TABLE 28: CREDIT RISK-WEIGHTED ASSETS

RWAs In millions of euros 31 December 2018 1 January 2018 Variation

IRB approach 242,323 243,398 (1,075)

Central governments and central banks 2,201 3,056 (855)

Corporates 175,335 177,900 (2,565)

Institutions 7,184 8,226 (1,042)

Retail 57,355 54,061 3,294

Other items 248 156 92

Standardised approach 220,383 216,903 3,480

Central governments or central banks 6,124 5,759 365

Regional governments or local authorities 781 658 123

Public sector entities 2,413 2,003 410

Multilateral development banks - - -

International organisations - - -

Institutions 4,530 6,713 (2,183)

Corporates 83,292 81,217 2,075

Retail 68,394 64,336 4,058

Exposures secured by mortgages on immovable property 26,082 29,088 (3,006)

Exposures in default 5,919 5,891 28

Exposures in the form of units or shares in collective investment undertakings 77 87 (10)

Equity 213 290 (77)

Other items 22,558 20,862 1,696

Equity positions under the simple weighting method 41,146 43,997 (2,851)

Private equit y exposures in diversifi ed portfolios 4,382 3,627 755

Listed equity exposures 3,912 5,445 (1,533)

Other equity exposures 32,851 34,925 (2,074)

CREDIT RISK 503,851 504,298 (447)